Before: Sir Hugh Bennett, President
Sir Richard Collas, and
A.G. Bompas, Esq., Q.C.
The Minister for Treasury and Resources
Harcourt Developments Limited
Esplanade Financial Centre Limited
Les Jardins Residential Limited
Les Jardins Leisure Limited
Harcourt Developments (Jersey) Limited
The Solicitor General for the Appellant.
Mr. P. Power representing the Respondents.
1. This is the judgment of the court.
2. The Minister for Treasury and Resources ("the appellant") appeals, with leave of the Bailiff, from his decision on 8th April, 2014, dismissing the appellant's application to strike out the Amended Order of Justice as against the appellant on the ground that it did not disclose a reasonable cause of action.
3. The Bailiff dismissed the application on two grounds, namely as appears from paras 58 to 61 inclusive of his judgment. First, he accepted the submissions of the respondents that it was arguable that the agreement of 19 July, 2007, ("the Heads of Terms") was not a mere agreement to agree (and thus unenforceable), that it was capable of being a document in which certain core terms had been agreed, a breach of which might found a claim for breach of contract. Second, as an additional factor which influenced him in deciding that the Amended Order of Justice should not be struck out against the appellant, he concluded that this may be a developing field of law.
4. On the application before the Bailiff there was no evidence, the facts being assumed to be those alleged by the respondents in the Amended Order of Justice, except that the Bailiff was invited to look at the Heads of Terms. He was, in effect, asked to find that it was plain and obvious from reading the Heads of Terms that the Heads of Terms were unenforceable, this conclusion being one to be reached regardless of any evidence that might be led at trial to establish the factual allegations in the Amended Order of Justice explaining references in, or put into context provisions of, the Heads of Terms. He was asked, in short to find that it could be seen plainly and obviously from the language of the Heads of Terms that certain of the material averments in the respondents' Amended Order of Justice concerning the meaning and effect of the Heads of Terms were unsustainable. He was not asked to conduct the trial of a preliminary issue concerning the respondents' case on the Heads of Terms at which there could be evidence taken.
5. This appeal raises the question for us whether or not the Bailiff was right to come to the conclusions he did.
6. The background is fully set out in the Bailiff's judgment. We gratefully adopt in their entirety the content of paras 4 to 24 inclusive in which he has set out very clearly the factual background, the principal terms of the Heads of Terms, the respondents' summary of the effect of the Heads of Terms, the alleged contractual duty of WEB (i.e. the First Defendant but not a party to the appellant's application) under clause 3.4 of the Heads of Terms to negotiate the terms of the Development Agreement in good faith and with all due diligence, WEB's alleged breach of duty, the consequences of those breaches, and finally that WEB's breach of contract was induced by the appellant i.e the tort of inducing a breach of contract.
7. We shall attempt to summarise what he said in as concise a way as possible. The Heads of Terms, to which all the respondents and the First Defendant, formerly known as WEB, were parties, related to the development of a significant section of the waterfront of St. Helier. The project was to include a number of office buildings, the closing and sinking of the major arterial road running along St. Aubin's bay and the harbour to the tunnel, and building an underground car park. It was to be Jersey's largest development to date. Although the fifth respondent was not an original party to the Heads of Terms, the Heads of Terms permitted the first respondent to substitute a different subsidiary in the place of the subsidiary which was party to the Heads of Terms as "the Developer", which the first respondent did so that the fifth defendant was to be the actual developer. The other respondents are subsidiaries of the first respondent. The Heads of Terms "set out in outline" the contractual terms "intended to be entered into" between the parties in relation to the proposed development of the waterfront. They envisaged that the contractual terms would be embodied in the Development Agreement to be entered into subsequently between some (but not all) of the parties to the Heads of Terms, the relevant parties including nevertheless the First Respondent, the Developer and WEB. And, so far as the appellant's submissions are concerned, critically, clause 3.4 provided as follows:-
"By their execution of these Heads of Terms the Parties are hereby each agreeing to act in good faith and with all due diligence with a view to seeking to agree the terms of the Development Agreement and the aforementioned ancillary documents and contracts and to enter into the Development Agreement within the timescale referred to in paragraph 6.2."
8. The respondents allege in the Amended Order of Justice that clauses 4, 5, 6, 7, and 8 of the Heads of Terms were the core terms which were to be incorporated in the Development Agreement and Property Leases, unless altered by agreement between the parties, but to which other core terms could be added by agreement. Clause 4 covered the phasing of the development, the use of the property, the number of parking spaces to be constructed, an obligation on the Developer to construct certain roadways and an underpass which would be excluded from the leases, and the maximum proportion of the development which could comprise residential units. Clause 5 provided that WEB was obliged to sublet the whole of the Esplanade Quarter to the Developer, i.e. the fifth respondent, under one or more property leases and summarised certain of the key provisions of the proposed property leases. Clause 6 dealt with the timetable for planning permission, the completion of the Development Agreement as soon as reasonably practicable but in any event by no later than 31st December, 2007, and the ability of WEB to terminate the Development Agreement by a particular date. Clause 7 provided that the Developer was to carry out the development in accordance with the Heads of Terms and the timetable therein and summarised certain of the "key" provisions to be included in the Development Agreement. It also contained certain provisions we refer to later. Clause 8 described the payments to be made by the Developer to WEB in consideration of the granting of the property leases, totalling £50 million payable in three instalments, each instalment to be a certain period following the lease date i.e. the date set out in the Development Agreement when the Esplanade Quarter would be let to the developer pursuant to Clause 5. Finally, Clause 9 contained "General Terms" providing among other things that "contracts" were to be governed by Jersey law, "dispute resolution will be by expert where appropriate and otherwise arbitration", and for the termination of the Heads of Terms in various circumstances. One of the General Terms, clause 9.7 is material, being in the following terms:-
"The entering into of these Heads of Terms shall terminate the provisions of all other agreements which are existing between the Parties and/or the Previous Parties or any of them in respect of the Development, the Property or any part thereof as at the date of hereof (including the exclusivity agreement as extended and the confidentiality agreement entered into between WEB and the Previous Parties)."
9. The Heads of Terms were stated to be subject to the approval of the Minister which was forthcoming, as accepted by the appellant, on or about 29 October, 2007.
10. In his judgment the Bailiff has set out with great clarity the rival contentions before him of the appellant and the respondents in paras 26 to 28 inclusive of his judgment, which we set out in full:-
"26. The Solicitor General submits (correctly) that the Minister can only be liable for the tort of inducing a breach of contract by another (in this case WEB) if there is a valid contract which WEB has breached. He contends that there is no such contract between WEB and the plaintiffs. The only contractual duty of WEB relied upon is the duty "to negotiate the terms of the Development Agreement in good faith and with all due diligence" as set out in paragraph 3.1 of the amended order of justice based upon Clause 3.4 of the Heads of Terms. The sole breach of duty pleaded is that at paragraph 4 of the amended order of justice where it is asserted simply that, in breach of the duty pleaded at paragraph 3.1, WEB did not negotiate the terms of the Development Agreement in good faith and with all due diligence.
The Solicitor General submits that the pleading asserts simply an agreement to agree or an agreement to negotiate and that it is clear as a matter of Jersey law that such an agreement does not amount to an enforceable contract because it is too uncertain.
Advocate Purkis does not dispute the general proposition that a mere agreement to agree or to negotiate in the abstract does not give rise to an enforceable contract. But she submits that that is not the position here. The key terms of the Development Agreement had been agreed and had been set out in the Heads of Terms as pleaded in the amended order of justice. The Development Agreement had to include these key terms, albeit that they would be fleshed out. Clause 3.4 of the Heads of Terms was not therefore an agreement to negotiate in an open-ended fashion but was an agreement to flesh out, by the agreed date, the necessary detail (required for a project of this magnitude) in relation to the agreed key terms. If this were not binding, what was the point of the Heads of Terms? And what would be the point of any developer ever agreeing heads of terms prior to agreement of the final contract? The effect of clause 3.4 was that the parties were contractually obliged to negotiate in good faith to achieve the already agreed key terms of the Development Agreement as set out in the Heads of Terms. It would be a breach of that agreement to insist on the introduction of provisions which were inconsistent with the agreed key terms. The factual situation in this case therefore was very different from an open ended agreement to negotiate and it followed that there was sufficient certainty for clause 3.4 of the Heads of Terms to be legally enforceable."
11. Between paras 29 and 55 of his judgment the Bailiff considers various Jersey and English authorities and matters of French law before turning to his decision.
12. Under "Decision" the Bailiff in paras 56 to 62 gives his reasons for concluding that the appellant's application to strike out the claim as against the appellant fails. Since we are invited to analyse those reasons critically it is only fair that they should be set out in extenso.
"56. I have to say that I see considerable difficulties in the plaintiffs' path. I consider that Jersey law is clear in that a mere agreement to negotiate is not enforceable. There is clear authority to that effect in Jersey and the reasons for the rule (as summarised by Longmore LJ in the passage quoted at paragraph 45 above and in the judgment of Lord Ackner quoted at paragraph 38) may be thought to be persuasive. The addition of the words 'in good faith' cannot in my judgment convert something that is too uncertain to have contractual effect into something which is of sufficient certainty to constitute a legally enforceable obligation. The only contractual duty relied upon in the amended order of justice is that set out in Clause 3.4 of the Heads of Terms which commits to the parties to "... act in good faith and with all due diligence with a view to seeking to agree the terms of the Development Agreement ...". The Solicitor General submits with considerable force that this is on its face nothing more than an agreement to agree or negotiate and it is therefore of no contractual effect. The only breach of contract relied upon is the breach of that obligation.
57. However, I remind myself that I am not sitting to decide the case having heard all the evidence as to the factual matrix in which the Heads of Terms were made, it being well established that the factual matrix underlying an agreement may well be relevant to its interpretation. Such factual matrix must also be relevant in some cases in ascertaining the intention of the parties (viewed objectively) and whether they intended to enter into a legally enforceable agreement. I may only strike out the claim if it is plain and obvious to me that the claim cannot succeed. As indicated by Beloff JA in the passage referred to at para 25, the mere fact that I might think the case is weak and may fail at the end of the day is not sufficient to allow me to strike out the claim and thereby prevent the plaintiffs from having the opportunity to present their case in full.
58. The plaintiffs' case is that this is not a mere agreement to agree or negotiate. Rather, it is that the parties agreed, in binding fashion, the key terms of what would be in the Development Agreement (and for that matter the leases). They then, as pleaded at paragraphs 2.24A - E of the amended order of justice, contracted to limit the scope of any future or further negotiation in respect of those key terms. Thus the duty to negotiate in good faith required negotiations which would not effectively negate the key terms (unless this were mutually agreed), but, on the contrary, required them to seek to negotiate to implement the key terms by fleshing them out and negotiating such other details as might be necessary for a full agreement. Thus an attempt to repudiate or negate a key term would amount to a breach of an enforceable contract.
59. It seems to me that, to succeed on this application the Solicitor General must persuade me that it is unarguable that an agreement along the following lines is enforceable. A and B agree in a written agreement the essential terms of how a development is to be carried out. They agree that there has to be a full contract which will flesh out these provisions and they commit to negotiate the full agreement in good faith. They then specifically provide in the written agreement that they consider that certain core terms are essential and that any negotiations cannot vary them (unless both sides agree). They state specifically that they accept that negotiations might founder on the detail of the core terms or on other matters to be included in the full agreement and that no claim would arise on this basis because it is too uncertain. But they also specifically agree in the written agreement that, should one party repudiate any of those core terms in the course of the negotiations, or seek to introduce terms which are inconsistent with them, this would give rise to a claim for breach of contract, because the parties specifically intended that this aspect of the agreement would have contractual effect. I cannot accept that such an agreement would not even arguably be of legal effect. It seems to me it must be arguable that such a specific and limited agreement would be sufficiently certain to have contractual effect.
60. I understand the Solicitor General's point that in this case there is no specific statement in the Heads of Terms that the parties had reached a binding agreement to undertake the development in accordance with the key terms and that the only binding agreement is said to be the agreement to negotiate. The situation in this case may not be exactly as I have described in the preceding paragraph. Nevertheless, it seems to me that it is arguable that, whilst it is not stated in such express terms, the agreement which the plaintiffs seek to rely on in the present case is to like effect as that summarised in the preceding paragraph. Accordingly, I do not feel sufficiently confident of the lack of merit in the plaintiffs' case to conclude that I can properly strike it out.
61. There is an additional factor which has influenced me. It seems possible that this may be a developing field notwithstanding the clear existing Jersey and English authority. In Petromec, Longmore LJ quoted Lord Steyn in querying whether Walford v Miles should be revisited. I consider the fact that this may be a developing field is an additional reason for not concluding at this stage (without hearing any evidence) that the plaintiffs' claim is hopeless.
62. For these reasons, I have on balance been persuaded that it would be wrong to strike out the plaintiffs' case.
13. The appellant's arguments, submitted in writing and orally by the Solicitor-General on his behalf, are, we understand, as follows. The clause of the Heads of Terms upon which the respondents seek to base their claim against the appellant is clause 3.4 (and no other).
14. The Amended Order of Justice alleges in paras 3.1 and 4 that the effect of clause 3.4 was "to impose a binding contractual duty" on the parties thereto to negotiate the terms of the Development Agreement "in good faith and with all due diligence", and that in breach of that duty WEB did not negotiate it in good faith or with all due diligence, particulars of which are then given. Damages of some £100 million are claimed. The Solicitor General drew our attention to paras 2.24A and 2.24B of the Amended Order of Justice (this being the second time the Order of Justice was amended) where it is pleaded that it follows from the matters set out in para 2.24A that a) the content of such key terms as aforesaid was agreed, b) the wording or precise expression of such key terms might be subject to further negotiation between the respondents and WEB in good faith and with all due diligence pursuant to clause 3.4, c) the key terms were not exclusive and further terms could be added to the Development Agreement over and above the key terms, and d) that it was expressly recognised at clause 4.1 that the Development Brief could be amended with the written approval of the respondents and WEB.
15. There is no dispute between the parties that the principles to be applied by a court of first instance when considering an application such as the one before the Royal Court were correctly set out by the Bailiff at para 25 of his judgment where he cites para 22 of the judgment of this court given by Beloff JA in Trant v Attorney General and others  JLR 231 as follows:-
"The test on an application to strike out is well established. It is only where it is plain and obvious that the claim cannot succeed that recourse should be had to the court's summary jurisdiction to strike out. Particular caution is required in a developing field of law. Provided that a pleading discloses some cause of action or raises some question fit to be decided by a judge, jurats or jury, the mere fact that a case is weak is not a ground for striking it out. These propositions are vouched for by a wealth of Jersey authority embracing principles deployed by the courts of the United Kingdom, see e.g. In re Esteem Settlement (6) (2000 JLR at 127) (we note en passant that a new regime, arguably more favourable to an application to strike out, has been introduced in England and Wales by the Civil Procedure Rules)."
16. The Solicitor General has submitted that the test on appeal is that set out by this court in Trant at para 1 of its judgment, namely whether there is a clear case that something had gone wrong in the judgment of the court of first instance or that an important question of law is involved. However, it is apparent from para 1 of the court's judgment in Trant that the test there set out related to whether leave to appeal should be granted or refused. In the instant case the Bailiff gave leave to appeal. We consider here that, although the Bailiff was exercising his discretion whether or not to strike out the respondents' case against the Minister, nevertheless that discretion was exercised on the basis of whether in law there was any basis for the respondents' case against the Minister. The Solicitor General has submitted that the application of the appellant involves a narrow point of law which can be determined without the lengthy and expensive litigation foreshadowed in the pleadings.
17. He further submits, we think correctly, that the Jersey authorities, set out and discussed by the Bailiff in paras 29 to 36 of his judgment, are clear that neither an agreement to agree nor an agreement to negotiate is enforceable in Jersey law - see Osment v. Parish of St Helier 1975 JJ 205 (CA) (see particularly pages 212 to 215), Jersey Automatic Company Ltd v. HA Gaudin and Co Ltd 1980 JJ159 at pages 166 - 7; Bennet v. Lincoln 2005 JLR 125 at paragraphs 34-6. The reason such agreements fail is that there is no sufficiently certain "objet" for there to be a Jersey contract. Reference was made to dicta in the decision of the Royal Court in Mirpuri v Bank of India  JRC 129 where it was held that a term "to monitor the deposits in just the same way as it had done in 2005" and "to protect the margin" was "...not sufficiently certain. It would not necessarily be possible from such a vague term to establish whether the plaintiff was or was not in breach of the term in any particular case" (see para 29 of its judgment).
18. The Solicitor General further relied on English law where agreements to agree fail for the very same reason i.e. that they are too uncertain to be capable of giving rise to contractual obligations. He submits that the Bailiff was, at para 38 of his judgment, right to refer to the speech of Lord Ackner, with which all the other Law Lords agreed, in the House of Lords' decision in Walford v Miles  2 AC 128. In that case there was a lockout agreement between the parties whereby the sellers agreed not to negotiate with any other party than the plaintiff during the period of the lockout agreement. The difficulty was that the agreement contained no time limit. The plaintiffs therefore said that there was an implied term that the sellers would negotiate in good faith. The House rejected that argument and dismissed the plaintiffs' appeal. The headnote at page 129 concisely gives the ratio of the decision, namely that the agreement contained no term as to duration of the obligation to negotiate and made no provision for the defendant to terminate the negotiations. A duty to negotiate in good faith was unworkable in practice and inherently inconsistent with the position of a negotiating party, since while the parties were in negotiation either of them was entitled to break off the negotiations at any time and for any reason. Accordingly the agreement lacked certainty and was unenforceable as a bare agreement to negotiate.
19. In his speech Lord Ackner observed at page 135 C that "the statement of claim alleged that, not only were the defendants "locked-out" for some unspecified time from dealing with any third party, but were "locked-in" to dealing with the plaintiffs, also for an unspecified period." At page 138 Lord Ackner said:-
"Before your Lordships, it was sought to argue that the decision in Courtney's case  1 W.L.R 297 was wrong. Although the cases in the United States did not speak with one voice your Lordships' attention was drawn to the decision of the United States' Court of Appeal. Third Circuit, in Channel Home Centers, Division of Grace Retail Corporation v. Grossman (1986) 795 F. 2d 291 as being "the clearest example" of the American cases in the appellant's favour. That case raised the issue whether an agreement to negotiate in good faith, if supported by consideration, is an enforceable contract. I do not find the decision of any assistance. While accepting that an agreement to agree is not an enforceable contract, the Court of Appeal appears to have proceeded on the basis that an agreement to negotiate in good faith is synonymous with an agreement to use best endeavours and as the latter is enforceable, so is the former. This appears to me, with respect, to be an unsustainable proposition. The reason why an agreement to negotiate, like an agreement to agree, is unenforceable, is simply because it lacks the necessary certainty. The same does not apply to an agreement to use best endeavours. This uncertainty is demonstrated in the instant case by the provision which it is said has to be implied in the agreement for the determination of the negotiations. How can a court be expected to decide whether, subjectively, a proper reason existed for the termination of negotiations? The answer suggested depends upon whether the negotiations have been determined "in good faith". However the concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations. Each party to the negotiations is entitled to pursue his (or her) own interest, so long as he avoids making misrepresentations. To advance that interest he must be entitled, if he thinks it appropriate, to threaten to withdraw from further negotiations or to withdraw in fact, in the hope that the other party may seek to reopen negotiations by offering him improved terms. Mr. Naughton, of course, accepts that the agreement upon which he relies does not contain a duty to complete the negotiations. But that still leaves the vital question - how is a vendor ever to know that he is entitled to withdraw from further negotiations? How is the court to police such an "agreement"? A duty to negotiate in good faith is as unworkable in practice as it is inherently inconsistent with the position of a negotiating party. It is here that the uncertainty lies. In my judgments, while negotiations are in existence either par5ty is entitled to withdraw from those negotiations, at any time and for any reason. There can be thus no obligation to continue to negotiate until there is a "proper reason" to withdraw. Accordingly a bare agreement to negotiate has no legal content."
20. It is to be noted that the Bailiff in para 39 of his judgment accepted that, although the House of Lords was considering the implication of a duty to negotiate in good faith, the reasoning applied equally where there is an express duty to negotiate in good faith. The Judicial Committee of the Privy Council has recently followed Walford v Miles in National Transport Co-Operative Society Limited v The Attorney General of Jamaica  UKPC 48 at para 61.
21. Accordingly the Solicitor General submitted that the principles that emerge as to why an agreement to agree is not enforced are that (1) the obligation is too uncertain, (2) it is difficult, if not impossible to say whether, if negotiations are brought to an end, the termination is brought about in good or bad faith, and (3) since it can never be known whether good faith negotiations would have produced an agreement at all or what the terms of any agreement would have been if agreement had been reached, it is impossible to assess any loss caused by breach of the obligation -see paras 115 and 116 of the judgment of Longmore LJ in Petromec Inc v Petroleo Brazilieiro SA  EWCA Civ 891, cited by the Bailiff at para 45 of his judgment.
22. At this point we interpose to draw attention to one feature of the Solicitor General's argument. Initially there had been a submission that the Heads of Terms was not a contract at all: it was simply an expression of the parties' aspirations, even when approved by the Minister so as to cease to be conditional, and gave rise to no legally binding obligations. This appears from the Solicitor General's skeleton argument for this appeal, where it is submitted that because there was no binding agreement to carry out the development there was therefore "no over arching contractual relationship between the parties" (para 9 of the skeleton argument). However, in his oral submissions he conceded, for the purposes of this appeal, that it was not the Minister's case that the Heads of Terms did not give rise to some contractual obligations.
23. While it is, of course, possible that an arrangement between parties containing an agreement to agree may be wholly unenforceable as being too uncertain to have contractual content, it is possible that an arrangement containing such an agreement may have contractual force as to some matters while as to other matters specific provisions would be unenforceable. Whether or not the uncertainty imported by an agreement to agree is such as to prevent there being any contract at all will depend on the context and the importance of the matter to be agreed: if, for example there is what appears to be a sale agreement and the matter to be agreed is the sale price, and if it is not possible to imply that the price is to be reasonable or to find some other way in which the price may be determined, then the whole agreement may be uncertain and unenforceable being incomplete as to an essential element. In the present case, in contrast, it might be possible that the material clause in the Heads of Terms, clause 3.4, is wholly unenforceable (so that WEB cannot have been in breach of that clause in refusing to negotiate with the respondents), while other clauses in the Heads of Terms nevertheless were effective as a matter of contract. An example of such a case is described in National Transport Coperative Society v The Attorney General of Jamaica, a case referred to by the Bailiff, where at paragraph  in the judgment of the Privy Council Lord Neuberger said this:
"In this case, there can be no doubt but that paragraph 9 of the second agreement was unenforceable: an agreement that amendments to an existing agreement are "require(d)" and will be "discussed and agreed" is both far too unspecific to have contractual effect and is, in terms, an agreement to negotiation (or to agree). However, contrary to the contention of the Society, this does not mean that all the other provisions of the second agreement cannot have contractual effect. Paragraph 9 is severable from the other terms of the second agreement, in the sense that the other terms and the provisions of clause 9 can each commercially and practically stand on their own, and there is nothing in the language of the second agreement to suggest that the other terms were to be suspended unless and until the amendments referred to in paragraph 9 were agreed. This point is reinforced in practice by the fact that the parties subsequently implemented many of the other terms of the second agreement (although that may well not be a point which can be relied on, as a matter of law)."
24. Plainly there is an overlap between what we think are two separate questions. First, was the Heads of Terms as a whole unenforceable as an agreement? Second, was clause 3.4 unenforceable as simply an agreement to agree, irrespective of whether any other parts of the Heads of Terms might have been enforceable? Obviously the second question does not arise if the first is answered in the affirmative; but a negative answer to the first question would be relevant in deciding on the meaning and effect of clause 3.4. We return to this later.
25. In his argument the Solicitor General then turned his attention to the particular way that the Bailiff sought to justify his refusal to accede to the appellant's application to strike out the claim as against him, namely paras 58 to 60 of his judgment, in the light of the principles which we have set out above. In his oral submissions he made two overriding points. First, at para 59 of the judgment the Bailiff failed to describe what was the respondents' pleaded case which the appellant had to meet. The respondents' case, as pleaded, is that the Development Agreement had to be negotiated. Clause 3.4 required that all the negotiations had to be conducted in good faith and with due diligence. The negotiations were not conducted in good faith and with due diligence and thereby a breach of clause 3.4 occurred. However, the Bailiff posited a set of particular circumstances which was not the respondents' pleaded case. The Solicitor General highlighted what he submitted was a critical sentence in para 59, namely:-
"They state specifically that they accept that negotiations might founder on the detail of the core items or on other matters to be included in the full agreement and that no claim would arise on this basis because it is too uncertain."
However, it was submitted that that was not the respondents' pleaded case set out in paras 2.24A and 2.24B of the Amended Order of Justice. Furthermore, the Solicitor General submitted that there is a revealing passage in the exchange during submissions between Advocate Purkiss, for the respondents, and the Bailiff at our bundle 1, tab 8, page 40, as follows:-
"ADVOCATE PURKISS: Well it was an agreement to negotiate in good faith to get to the point that the core objet, and we can counsel the French Law about this, but the objet taken as a whole of the Heads of Terms could be brought to fruition and that core objet is doing the Waterfront Development in the longer run, but in the immediate run it's coming up with the development agreement that would support that by whatever the date was 30th June 2008.
BAILIFF: Yes but you can't possibly assert and you haven't in the Order of Justice that the objet of the Heads of Terms was to build the Waterfront, the objet of the Heads of Terms was to enter into a development Agreement.
ADVOCATE PURKISS: Yes that's right as stage one, in the longer run they had bigger ambitions-----
BAILIFF: ...Well that's not what you pleaded.
ADVOCATE PURKISS: No.
BAILIFF: And it wasn't actually what the contract said.
ADVOCATE PURKISS: No, no, I accept that."
In that passage it is submitted that the respondents were accepting that the Heads of Terms was not a contract to build, and that that exchange demonstrates the difference between the respondents' pleaded case and the scenario painted by the Bailiff in para 59 of the judgment. See also the exchange of correspondence between the Solicitor General and Collas Crill at bundle 1, tab 11. The Solicitor General submits that it is implicit in para 59 of the Bailiff's judgment that he accepted that clause 3.4 was unenforceable in a myriad of circumstances, for he defined a set of circumstances in which he concluded that clause 3.4 might arguably be enforceable. The Bailiff accordingly fell into error. He erroneously concluded that that the objet of that clause might arguably be sufficiently certain if a particular set of circumstances arose. It is submitted that is the wrong test.
26. The second oral submission of the Solicitor General was that if he was wrong in his first oral submission, then anyway para 59 of the judgment is positing a contract which seeks to define the content of otherwise unenforceable negotiations, which is of no consequence in contract law. The Bailiff, in describing only part of the contract i.e the core terms, nevertheless acknowledged that in "other matters" the parties were free to walk away from the negotiations and no claim could then arise.
27. He further submitted that it is difficult, if not impossible, to say whether, if negotiations are brought to an end, the termination is brought about in good or bad faith. The court cannot be expected to police such an agreement. He asks rhetorically, when does a failed attempt to negotiate the detail of a core term become an attempt to resile from a core term thereby giving rise to a claim for damages estimated at £100 million?
28. He next submitted that it is impossible to assess any loss caused by the breach of the obligation under clause 3.4, since it can never be known whether negotiations in good faith would have produced an agreement at all or what the terms of that agreement would have been if it would have been reached. The "loss" in this case must be the opportunity to engage in further negotiations which has no legal significance in contract law.
29. We were then taken by the Solicitor General to a line of English authorities in all of which the courts declined to hold that what in essence were agreements to agree were enforceable. They included Dhanani v Crasnianski  EWHC 926, Dany Lions Ltd v Bristol Cars Ltd  EWHC 817, Sax v Tchernoy  795, Abballe v Alstom UK Ltd  WL 331020, Barbudev v Eurocom Cable Management Bulgaria EOOD  EWCA Civ 548, Petromec ibid, and finally Phillips Petroleum Co UK Ltd and Ors v Enron Europe Ltd  CLC 329 (CA). It is not necessary to go through each of these authorities, other than Phillips Petroleum, since they all apply the principles which we have set out above to the particular facts of the case. Nevertheless we consider that Phillips Petroleum is instructive, even bearing in mind that that case was a decision on particular facts.
30. By a majority the English Court of Appeal, Kennedy and Potter LJ, Sir John Balcombe dissenting, allowed the buyers' appeal and set aside the declaration granted by Colman J that it is or would be a breach of certain articles in the gas sale agreement ("GSA") for the buyer to refuse or fail to agree a commissioning date on the basis of certain reasons. The court held that, when the critical words of the articles were read in their contractual setting, it was impossible to say that they imposed on the buyer a contractual obligation to disregard the financial effect upon him when deciding how to discharge his obligation to use "reasonable endeavours" to agree a commissioning date under article 2.2 of the GSA. The words in that article were no more than an agreement to agree.
31. At pages 340 and 341 Kennedy LJ said:-
"But the fact remains that the critical words, that is to say the words requiring both parties to use "reasonable endeavours" to fix a commissioning date do not even suggest when, in relation to the programme of work, the "reasonable endeavours" should commence, or how the commissioning date should be triggered other than by agreement on both sides..."
32. Potter LJ agreed with the judgment of Kennedy LJ and added some comments of his own upon which the Solicitor General relies. At page 343 he said:-
"Finally the unwillingness of the courts to give binding force to an obligation to use 'reasonable endeavours' to agree seems to me to be sensibly based on the difficulty of policing such an obligation, in the sense of drawing the line between what is to be regarded as reasonable or unreasonable in an area where the parties may legitimately have differing views or interests, but have not provided for any criteria on the basis of which a third party can assess or adjudicate the matter in the event of dispute. In the face of such difficulty, the court does not give a remedy to a party who may with justification asserts, 'well, whatever the criteria are, there must have been a breach in this case". It denies the remedy altogether on the basis of the unenforceability in principle of an obligation which may fall to be applied across a wide spectrum of arguable circumstances. The case seems to be to afford a good example of the wisdom of that approach."
33. Furthermore, he continued:-
"Even if I were satisfied (which I am not) on the basis of the facts agreed for the purposes of the issue that, by acting solely in its financial interests, the buyer has not made reasonable endeavours to agree a commissioning date prior to 25 September, the requirement of 'reasonableness' would nonetheless present acute difficulties to any court asked to decide from what date the buyer was in fact in breach and ought to be held liable in damages. For that purpose it might well be necessary to investigate at length, and form judgments upon, the availability of key personnel, designers or other specialists, the state and progress of the works, the stage at which the works might legitimately be regarded as ready from a practical and technical point of view including testing, the commitment of resources towards completion and finalisation of the facility, the completion of the onsale arrangements and a variety of other considerations arguably reasonable to be taken into account before proposing and/or agreeing a commissioning date.
In all those respects, the GSA utterly fails to reveal any express or implied criteria to be applied."
34. Thus, the Solicitor General has submitted that, once the conclusion is reached that clause 3.4 is no more than an agreement to agree and thus unenforceable, particular circumstances, whether those envisaged by the Bailiff at para 59 or any others, cannot thereby convert clause 3.4 into an enforceable obligation. Clause 3.4 is difficult, if not impossible, to police. Accordingly the Bailiff fell into error and the appeal should be allowed on that ground alone.
35. As to the "additional" factor set out by the Bailiff at para 61, the Solicitor General has submitted that this is not a "developing field" of law. Despite the Bailiff acknowledging "the clear existing Jersey and English authority" yet he seemed to place some reliance on a lecture given by Lord Steyn who queried whether Walford v Miles should be revisited. However, the Solicitor General says that Walford v Miles has not been revisited, indeed was recently followed by the Privy Council in National Transport Co-Operative Society v The Attorney General of Jamaica.
36. Until 20 August, 2014 the respondents were represented by Collas Crill, when the latter ceased to act on their behalf. No written contentions opposing the appeal were filed by the respondents by the latest date of 8 September. Accordingly enquiries were made of the respondents as to their position. The court was sent a letter of 8 September written by Mr Pat Power, a director of the first respondents, in which he asked the court to uphold the Bailiff's decision and enclosed copies of the respondents' written submissions dated 6 January, 2014 and supplemental submissions (undated) before the Bailiff. However, the court wished to be clear about the respondents' position and on 10 September asked for clarification, by return, as to whether a) the respondents were resisting the appeal, b) if they were to be legally represented on the hearing of the appeal, and if so, by whom, and c) whether the respondents were seeking leave to file their written contentions (resisting the appeal) out of time, and if so, by when would those contentions be filed with the court.
37. In the event the respondents, through Mr Power, told the court that the respondents did intend to resist the appeal, that they would not be legally represented but by Mr Power, and that the only written contentions they would rely on were the letter of 8 September, 2014 with its enclosures, to which we have already referred. Mr Power appeared before us, and in a short and dignified address made his submissions. He told us something of the history of the respondents' business activities generally, and he went through the history of the instant case as set out by the Bailiff in his judgment. He submitted that the Development Agreement would have expanded upon the Heads of Terms but would not have changed the fundamentals. It was not until February 2008 that the respondents received the first draft of the Development Agreement and it was not until March 2009, 20 months after the Heads of Terms, that a further draft was received. There was, he submitted, no good faith in the negotiations from July 2007 to March 2009 and the draft received in March 2009 was radically different from the earlier one. He submitted that there was collaboration between WEB and the Minister to get rid of the respondents. Clause 3.4 had to be interpreted at trial in the light of the evidence of witnesses and the documents (and those disclosed during the process of discovery), that new terms had been put into the draft of March 2009 to frustrate the process, and that any insinuation that the respondents could not carry out the development was quite erroneous since the respondents had carried out over £400 million worth of developments in different countries.
38. We have read the respondents' written and supplemental submissions before the Bailiff, which appear at tabs 7 and 9 of bundle 1 of the papers before us. We consider that the Bailiff has accurately and succinctly set out the respondents' arguments at para 28 of his judgment, and the respondents' case at para 58 of his judgment. However, in the absence of any written or oral submissions on the respondents' behalf controverting the legal submissions of the Solicitor-General to us, it is right that we should look at the respondents' submissions before the Bailiff, as we have been requested to do by the respondents.
39. At paras 3 and 4 of the respondents' written submissions dated 6 January, 2014 is a summary of the respondents' claim, as follows:-
"3. By their amended Order of Justice filed and served pursuant to a consent order dated 29 August 2013, the Plaintiffs bring claims against the Defendants in respect of the failure of the Waterfront development to proceed. The Plaintiffs action the First Defendant for breach of the contract referred to in the Amended Order of Justice as the "July Heads of Terms", in which the parties agreed the core terms of Leases and Development Agree ments according to which the development was to take place. The Plaintiffs sue the Second Defendant for procuring that breach of contract. The case pleaded, broadly, is that despite having agreed the core terms of the Leases and Development Agreements, and the conditions precedent to them, the First Defendant unilaterally sought to change these. The Second Defendant procured that breach because he demanded and insisted on the First Defendant taking that position.
4. The essence of the case is pleaded at paragraphs 2.23 to 4.17 of the Amended Order of Justice. The Plaintiffs would develop land at the Waterfront to be leased to them under Property Leases granted by the First Defendant, all pursuant to a Development Agreement to be agreed with the First Defendant. The Plaintiffs and First Defendant agreed the key terms of those Property Leases and that Development Agreement, and the conditions precedent to them in the July Heads of Terms. The Second Defendant approved the latter contract. Any alteration or addition to the key terms agreed in it was to be negotiated by the Plaintiffs and First Defendant "in good faith and with all due diligence" to ensure entry into the Development Agreement by the agreed date of 31 December 207. The First Defendant breached the contract by delaying in providing a draft development agreement, and by its insistence of the Development Agreement containing terms very different to those agreed in the July Heads of Terms. It refused to receive or countenance any alternatives. The First Defendant therefore did not negotiate at all, let alone in good faith and with all due diligence as the contract required."
40. There then follows a procedural history and an argument that the appellant's summons to strike out is an abuse of process. The Bailiff rejected that submission between paras 63 and 71. There is no cross-appeal against that finding in the respondents' Notice to Affirm the Bailiff's decision dated 29 April, 2014. Accordingly there is no need for us to consider the respondents' arguments on this point.
41. At paras 21.1 and 21.2 it is argued that the application to strike out is misconceived for two related points which are as follows:-
"21.1 First - and this is very important - the Second Defendant's summons and skeleton argument mischaracterises the case as actually pleaded. The Plaintiff's case is not that the parties simply agreed to negotiate a subsequent contract. Nor is it that they agreed only to commit to a course of negotiation which might or might not ultimately produce agreement on the detailed terms of Leases and a Development Agreement. Rather, the case is that they agreed, in binding fashion, the core terms (in quite some detail) of a subsequent contract. Then, as pleaded at paragraphs 2.24A-2.24C of the Amended Order of Justice, they contend that they contracted to limit the scope of any future or further negotiation in respect of these terms to finalise the Leases and Development Agreement. The nature of that limitation was that any amendment or addition was to be negotiated in good faith and with all due diligence to achieve the object set out in the July Heads of Terms, of a Development Agreement with Leases annexed to be finalised by 31 December 2007, containing the irreducible core content already agreed (although in practice it would have had to be recognised that this too could be renegotiated).
21.2 Secondly, the Second Defendant's summons and skeleton argument are misconceived in their broad contention that Jersey law can never recognise good faith obligations, and in particular an express obligation to negotiate in good faith, as other legal systems do (which is the consequence of his claim that clause 3.4 of the Heads of Terms cannot be enforced as binding such that these claims brought for its breach should be struck out on principle). There is ample authority that such an obligation is sufficiently certain and can be given the meaning the parties intended. This is particularly so in the context of clause 3.4 imposing an express duty to negotiate in good faith and with all due diligence to achieve a Development Agreement, whose key terms had already been agreed, by the agreed date of 31 December 2007."
42. Advocate Purkiss, the author of these contentions, then refers to various authorities in Jersey, English and French law to make good her submissions and concludes at paras 32 to 34 that therefore Jersey, English and French law are capable of recognising an express obligation of good faith as enforceable and binding.
43. We have considered the supplemental submissions (undated) but we do not think that these really carry the respondents' case any further, since it is to be noted that what they all lead up to is the point in para 40 which in essence repeats the central points made in the written submissions.
44. As we have said, the respondents have filed a Notice to Affirm the Bailiff's decision on grounds additional to those relied on by him in his judgment. We shall return to these grounds only if we are minded to allow the appeal.
45. It seems to us, having read the written arguments of the Solicitor General in the appeal and of Advocate Purkiss before the Bailiff and having heard the oral submissions of the Solicitor General and Mr Power, that it is essential to see what it was that the Bailiff was saying in his judgment between paras 56 and 60 inclusive and then to consider whether he went wrong in his reasoning as submitted by the Solicitor General.
46. In our judgment there can be no quarrel at all with the Bailiff's reasoning at para 56 that a) Jersey law is clear in that a mere agreement to negotiate is not enforceable, b) that the addition of the words "in good faith" cannot convert something that is too uncertain to have contractual effect into something which is of sufficient certainty to constitute a legally enforceable obligation, c) that the only contractual duty relied on in the amended Order of Justice is that set out in clause 3.4 of the Heads of Terms, and d) that there is considerable force in the argument that on the face of that clause it is nothing more than an agreement to agree or an agreement to negotiate and that it is therefore of no contractual effect.
47. The Bailiff directed himself, and we think correctly, at paragraph 57 that he could only accede to the application to strike out if "it was plain and obvious to me that the claim cannot succeed" and that it was not enough for him to conclude that the case of the respondents is weak and may fail at the end of the day.
48. He then summarises the respondents' case at para 58 of the judgment, and we consider, correctly. He noted the respondents' case that the Heads of Terms was not a mere agreement to agree or negotiate. The case, it follows from what we have pointed out earlier, is to be taken to be correct for present purposes so far as concerns certain terms, a fact to be taken into account when interpreting the material clause at 3.4.
49. At para 59 the Bailiff poses a scenario, which at para 60 he recognises may not be exactly similar to the instant case but which he says is to like effect. He then concludes at the end of para 59:-
" I cannot accept that such an agreement would not even arguably be of legal effect. It seems to me that it must be arguable that such a specific and limited agreement would be sufficiently certain to have contractual effect."
50. The scenario at para 59, as the Solicitor General is correct to submit, is not on all fours with the instant case. For, as the Bailiff remarked at para 60, there is in the Heads of Terms no specific statement that the parties had reached a binding agreement to undertake the development in accordance with the key terms and that, so far as relevant, the only binding agreement is said to be the agreement to negotiate. Thus, it may be said that in the instant case the parties did not specifically agree in the Heads of Terms "that, should one party repudiate any of those core terms in the course of negotiations, or seek to introduce terms which are inconsistent with them, this would give rise to a breach of contract, because the parties specifically intended that this aspect of the agreement would have contractual effect" - see para 59.
51. However, the issue in relation to the Bailiff's reasoning at paragraphs 59 and 60 is whether the difference between the scenario at para 59 and that which appears from the Heads of Terms is sufficiently material to result in there being no prospect of the Heads of Terms, and importantly clause 3.4, being held to have had the effects which the Bailiff thought his suggested scenario might have.
52. We now turn to consider the appeal in the light of all the submissions.
53. It is incontrovertible that in Jersey law an agreement, properly characterised as an agreement to agree or an agreement to negotiate, is not one which can create a contractual obligation and therefore is incapable of enforcement. In his judgment the Bailiff referred to several Jersey authorities establishing this principle. It is the same position as in English law for the reasons set out by Longmore LJ at paras 115 and 116 of his judgment in Petromec. For convenience we describe such an agreement as a "bare agreement to agree".
54. Having said this, however, we would draw attention to what was said by Longmore LJ in the following paragraphs of his judgment, paras 117 to 121:-
"117 The first objection, that the obligation is an agreement to agree, carries little weight in the present case. It is contained in the Supervision Agreement which is itself legally enforceable. (No one suggested that, if the obligation to negotiate the cost of the upgrade is unenforceable, that affects the rest of the agreement.) The obligation only relates to the cost to Petromec of the Roncador upgrade over and above the South Marlim upgrade and the cost of any variation orders. The "cost to Petromec" is comparatively easy to ascertain (especially if no element for profit is to be included). If agreement is not reached, the court will itself have to ascertain what the reasonable cost of such upgrade should be. If there are any ascertainable losses which arise from a failure to negotiate in good faith, they will likewise to ascertainable with comparative ease.
118 These reasons also apply to the third objection, the difficulty of ascertaining loss. If the court is able to conduct the exercise of finding the reasonable cost to Petromec of the upgrade, there should be no difficulty in deciding what the result of good faith negotiations is likely to have been. Unless there are special factors present, it is likely to be the same as the reasonable cost. No doubt there could be argument in the present case as to whether, if negotiations did not proceed (but should have proceeded) in good faith, they would have embraced an uplift and whether, in that event, the uplift would have been in any particular amount, but it is not uncommon for courts to have to assess, by way of calculating damages whether a claim against a third party was good or not and for how much it might have been settled. Any exercise in relation to uplift would raise similar (but not insurmountable) problems. To this extent therefore, I would not share the concerns which the judge expressed in paragraph 170 of his judgment.
119 It is the second objections that is likely to give rise to the greatest problem viz that the concept of bringing negotiations to an end in bad faith is somewhat elusive. But the difficulty of a problem should not be an excuse for the court to withhold relevant assistance from the parties by declaring a blanket enforceability of the obligation. Once the fraud amendment has been permitted, the court is going to have to consider the reasons why the negotiations were terminated in any event. If fraudulent representations as to the intention to continue negotiations were made, the obligation to negotiate in good faith is likely to fall away as a separate obligation; if there was no fraudulent representation, it is perhaps less likely that there will have been bad faith in terminating negotiations but it will not be particularly difficult to tell whether there was or not.
120. The authority chiefly relied on by Mr Hancock in support of blanket unenforceabili9ty was the decision of the House of Lords in Walford v Miles, which (of course) binds us for what it decides. The main distinction between that case and this was that in that case there was no concluded agreement at all since everything was "subject to contract", there was, moreover, no express agreement to negotiate in good faith. There were negotiations for the sale of a business in the course of which the defendant prospective vendor agreed not to negotiate with any third party and to negotiate only with the claimant prospective purchaser. All the negotiations were subject to contract and the House of Lords held that the "lock-out agreement" was unenforceable because there was no provision saying how long it was to last. The claimants sought to resolve this difficulty by asserting that it was an implied term of the agreement that, while the defendant wanted to sell the business, they would negotiate in good faith with the claimanat. The House of Lords held that it was impossible to imply such a term since it was unworkable in practice and inherently inconsistent with the position of a party negotiating "subject to contract". The lock-out agreement was therefore too uncertain to be enforceable. As Lord Ackner (with whom the rest of their Lordships agreed) said at page 138G:
"while negotiations are in existence either party is entitled to withdraw from those negot5iations, at any time and for any reason. There can be thus no ligation to continue to negotiate until there is a 'proper reason' to withdraw. Accordingly, a bare agreement to negotiate has no legal content."
121 That shows the difference from the present case. Clause 12.3 of the Supervision Agreement is not a bare agreement to negotiate. It is not irrelevant that it is an express obligation which is part of a complex agreement drafted by City of London solicitors and issued under the imprint of Linklater & Paines (as Linklaters were then known). It would be a strong thing to declare unenforceable a clause into which the parties have deliberately and expressly entered. I have already observed that it is of comparatively narrow scope. To decide that it has "no legal content" to use Lord Ackner's phrase would be for the law deliberately to defeat the reasonable expectations of honest men, to adapt slightly the title of Lord Steyn's Sultan Azian Shah lecture delivered in Kuala Lumpur on 24th October 1996 (113 LQAR 433 (1977)). At page 439 Lord Steyn hoped that the House of Lords might reconsider Walford v Miles with the benefit of fuller argument. That is not an option open to this court. I would only say that I do not consider that Walford v Miles binds us to hold that the express obligation to negotiate as contained in clause 12.4 of the Supervision Agreement is completely without legal substance."
55. The next matter to discuss is whether the Heads of Terms, construed as a whole, is a bare agreement to agree. Separately, and we consider this later, there is the question whether the provisions of the Heads of Terms central to the respondents' case, in particular clause 3.4, amounted only to a bare agreement to agree, or whether they gave rise to an agreement where the parties agreed, in binding fashion, the key terms that would be in the Development Agreement, that the duty to negotiate in good faith required negotiations that did not negate the key terms (unless mutually agreed) but required the parties to implement the key terms by fleshing them out, and thus an attempt to repudiate or negate a key term would amount to a breach of an enforceable contract.
56. In our judgment, if clause 3 were to be considered in isolation from the rest of the Heads of Terms there is no doubt that its wording, particularly clause 3.4, points strongly to it being a bare agreement to agree thus importing no contractual obligation. Clause 3.1 speaks of the Heads of Terms setting out the contractual arrangements "intended to be entered into" between the parties. Clause 3.2 speaks of "it is envisaged that the contractual arrangements will be embodied in a development agreement (the "Development Agreement") to be entered into between the [parties]". Clause 3.4 speaks of the parties "agreeing to act in good faith and with all due diligence with a view to seeking to agree the terms of the Development Agreement..."
57. Furthermore, the respondents have tied themselves to clause 3.4 alone, when alleging breach of the Heads of Terms: at paragraph 3.1 of the Amended Order of Justice it is said that "the effect of Clause 3.4 of the July Heads of Terms was to impose a binding contractual duty on the parties to negotiate the terms of the Development Agreement in good faith and with all due diligence"; and at paragraph 4 it is alleged that WEB was in breach of that duty in that, as later particularised in the Amended Order of Justice, it did not negotiate the terms of the Development Agreement in good faith and with all due diligence. Thus, if that clause is looked at in isolation then the Bailiff was right at para 56 to remark that there is considerable force in the argument it is on its face nothing more than an agreement to agree or an agreement to negotiate.
58. But that is not the end of the matter. Are the remainder of the clauses, in particular clauses 4, 5, 6, 7, and 8 of the Heads of Terms, terms which the parties had agreed "in binding fashion", for example as key terms, which would be in the Development Agreement and which if a party subsequently in the negotiations repudiated or negated would give rise to a contractual obligation which had been breached, notwithstanding the wording of clause 3.4? This question indeed arises from the respondents' pleading of the alleged breach of clause 3.4 of the Heads of Terms, as the particulars of the alleged breach make reference to WEB supposedly seeking to include into the Development Agreement provisions inconsistent with provisions of the July Heads of Terms.
59. Leaving aside the provisions in the Heads of Terms specifying both the time by which the Development Agreement was to be completed (clause 6.2) and "non-exhaustively" its content (clause 7), there are at least two provisions which were to operate independently of the forthcoming Development Agreement and to be of immediate contractual effect once the Minister gave his approval to the Heads of Terms.
60. The first is clause 7.2. This provides that "The provisions of paragraphs 7.6, 7.9, 7.10, 7.11, 7.12, 7.18 and 7.19 shall be effective as between the Parties from the date of signing of these Heads of Terms until the date upon which the Development Agreement becomes unconditional." The various clauses referred to and expressed to be immediately effective made provision for such matters as (a) the provision of financial information and confidentiality (clause 7.6), (b) the designing of the Development (to be subject to WEB's approval, such approval by clause 3.6 not to be unreasonably withheld or delayed (clause 7.9), (c) the obtaining of consents required for the Development (clause 7.10), (d) obligations on the part of the Developer "to appoint the professional team in respect of the Development", the team to include various specified persons, and "to meet the reasonable costs of such independent consultants, advisors and monitoring surveyors as may be engaged by the States of Jersey or any Minister of the States" as to certain matters (clauses 7.11 and 7.12), (e) the sharing of information and progress reporting (clause 7.18) and (f) the maintenance by the Developer of a suitable permanent staff in Jersey (clause 7.19).
61. The second is clause 9.7, which terminated with immediate effect previous agreements between the parties in respect of the Development or the relevant land. The clause made it clear that these agreements included "the exclusivity agreement as extended and the confidentiality agreement" between various parties.
62. We think that quite arguably, following a trial, it might be found that particular terms of the Heads of Terms were indeed contractual and not altogether devoid of binding force. Arguably at the least the two clauses we have just referred to were contractual: that, whatever conclusion might be reached as to clause 3.4 and the claimed breach of that provision, the Heads of Terms might at least as to parts have been effective as a contract. This would be in line with features of the Heads of Terms which give the appearance, looking at the copy of the document before us, of being intended as a formal and binding agreement between commercial parties. Striking features are: the document is formally dated on the front; it appears to have been signed by various individuals as authorised signatories of the parties, the signatures being witnessed; it is expressed to be "subject to approval of Treasury & Resources Minister", a condition which would be irrelevant if it was not intended to have any contractual effect; it bears on the front the name and address of Carey Olsen, and plainly was drafted by or with the assistance of lawyers; it runs to 18 operative pages, with elaborately drawn and detailed provisions. Of these features the way in which the Heads of Terms was executed does seem inconsistent with a document which was not intended to be binding. Indeed, the very language used in clause 7.2, quoted above, is explicit that certain specified provisions were to be immediately effective as between the parties.
63. Making the assumption, which may after all be mistaken, that particular terms of the Heads of Terms did have some contractual effect when made and approved by the Minister, nevertheless we have come to the conclusion that the material provision relied upon by the respondents, clause 3.4, was ineffective as lacking sufficient certainty of content. Our reasons are as follows.
64. On the assumption in the previous paragraph, the Heads of Terms imposed an obligation on the Developer to seek expeditiously to obtain approval of the States of Jersey for the principle of the Development (clauses 6.1, 7.2 and 7.10), and thereupon to submit an application for outline planning permission for the Development (clause 6.1) which it was required to have designed (clause 7.9). Concurrently there was expressed to be an obligation for the parties to negotiate the Development Agreement. This is the obligation which is said by the respondents to have been broken. This Development Agreement was supposed to be entered into either by 31 December, 2007 or, if the States approval for the Development came after that date, four months following the grant of the approval (clause 6.2). Following the making of the Development Agreement, but subject to several conditions precedent, there were to be sub-lettings by WEB of the development land to the developer or a subsidiary of the first respondent (clauses 5 and 7.4). Assuming the Development Agreement was not made within the four month period or by 30 June, 2008 WEB was entitled to terminate the Heads of Terms "without further obligation or liability". It was also entitled to terminate the Heads of Terms at any time if there was a change in the ultimate ownership of (among others) the Developer or the first respondent (clause 9.4). No equivalent provision was made for termination by the respondents.
65. Within this structure there are two possible bases on which clause 3.4 might be found to be enforceable, being held to be more than a bare agreement to agree lacking in contractual content. First, would be the possibility that the Development Agreement was itself only to set out in a more detailed manner what had already been sufficiently agreed or was otherwise ascertainable to make a complete and enforceable bargain as to the carrying on of the Development, and that in the absence of agreement between the parties as to the inclusion of further or different matters they would not be included. Second, there would be the possibility that the parties had stipulated a process for arriving at the making of the Development Agreement with terms yet to be agreed, and although the process might not in the event lead to a concluded Development Agreement, nevertheless the process was itself sufficiently defined so that a breach of the process could give rise to a claim in damages.
66. The first of these two possibilities is illustrated by the case of (a case referred to in one of the Jersey authorities put before the Bailiff) where, at 288-9 Parker J said this:
"It appears to be well settled by the authorities that if the document or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or a term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored."
67. It seems to us that what the Bailiff was discussing in paragraphs 59 and 60 of his judgment was not this possible basis, which in any case does not seem to have been argued for by the respondents, see the exchanges in argument before the Bailiff and the correspondence referred to in para 25 above. This is understandable, as the making of the Development Agreement was itself a condition for various further essential matters, not least of all the disposition of the development land.
68. Further, it appears not to have been suggested in the respondents' argument that all the key matters to be contained in the Development Agreement were already agreed; rather the point was made in written submission that many of those yet to be agreed were to be agreed between the parties "acting reasonably". The difficulty with this submission is that clause 3.10 and 3.11 made the question of what would be "reasonable" for a party purely a matter for that party's own subjective appreciation of its own self-interest. In other words, this is not a case in which purely objective criteria can determine whether or not something is reasonable.
69. It is true that clauses 4 to 8 inclusive do set out important matters which the parties wished to be included in the Development Agreement. But in our view what is so striking is that there is no clause in the Heads of Terms to the effect that those matters are key terms which the parties agree must be included in the Development Agreement in any event, unless they are to be excluded by mutual consent. As submitted to us by the Solicitor General, there was a material distinction between the description given by the Bailiff in para 59 of his judgment and the present case. Further, in our view, the most significant clause in the Heads of Terms, when put alongside clauses 4 to 8 inclusive, is clause 3.4. It is that clause upon which the respondents rely to found their claim. In our view the words of it cannot admit of a construction that other clauses in the Heads of Terms convert what is an agreement to agree or an agreement to negotiate into an agreement giving rise to a contractual obligation breach of which is capable of enforcement. The short of this is that we see no realistic possibility of clause 3.4 being found to have sufficient content as to the end result, the Development Agreement itself, on the basis that essentially it required no more than the formalisation of an existing concluded agreement, and therefore had a certain objet.
70. We think that the Bailiff, in his discussion in paragraphs 59 and 60, had in mind the second of the two possible bases we have described. This basis was that the parties had sufficiently defined in the Heads of Terms what it was they had promised to do to bring about a second agreement, the Development Agreement: they had, in short, established a system which was sufficiently definite to allow enforcement by the court, and thus to allow it to be said that there was contractual certainty.
71. In the present case there are three features which might be relied upon to support an argument that clause 3.4 of the Heads of Terms was effective as establishing a process which the parties were to follow, even if the outcome of following the process might not be a concluded Development Agreement. First, on the assumption on which we are at present proceeding, the Heads of Terms was, in other respects, an agreement with contractual effect between the parties. Second, clause 3.4 referred not only to good faith but also due diligence; and it may be argued that whether or not due diligence is used is capable of objective assessment. Third, it might be argued that some part of the content of the intended Development Agreement was indicated, if not specified, in the Heads of Terms so that it would be inconsistent with negotiation in good faith to insist on departing from that content.
72. This third feature seems to have weighed with the Bailiff and to have underpinned his decision as explained by his reasoning in paragraphs 59 and 60 of his judgment.
73. We think that none of these three features can assist the respondents. As to the first, we entirely accept that the courts will strive to give meaning and effect to all the terms of a contract entered into between commercial parties and set out in what appears to be a professionally drawn formal document. However the term in question in the present case, a requirement to negotiate, is according to the overwhelming weight of authority incapable of having contractual effect unless in the context it is objectively certain or capable of being made certain. An illustration of this is provided by the case of Phillips Petroleum Co UK Ltd v Enron to which we were referred. The majority of the Court of Appeal concluded that the term requiring agreement was lacking in certainty and ineffective. Sir John Balcombe, dissenting, was able to conclude that in the particular context the court could and would find that the term was capable of being construed in a way which gave it sufficient certainty. As he pointed out, this was a question of construction of the particular contract (page 346 of the report). Nevertheless, in the present case the necessary certainty cannot be found simply in the indication that the negotiations are to be in good faith and with due diligence, as the meaning of "good faith" in negotiations is itself inherently uncertain.
74. As to the second, the problem is that the addition of the requirement of due diligence as an additional feature of the required negotiations does not remove the inherent uncertainty which is present through the negotiations having also to be in good faith.
75. As to the third, the answer has been given by the Solicitor General, the fact that it might in one set of circumstances be possible to see that objectively what had been stipulated for had not been done, does not necessarily mean that there is no conceptual uncertainty: the relevant provision should be capable of being seen to have certain meaning from the outset. We should add that it has not been suggested, and there would be no basis for a suggestion, that in clause 3.4 the reference to good faith meant no more than that in a negotiation as to the Development Agreement no party should insist on something different from what had been expressly provided in the Heads of Terms. It would be artificial to construe the expression "good faith" in this way.
76. We therefore think that clause 3.4 of the Heads of Terms did not impose on WEB an enforceable contractual obligation.
77. The Solicitor General also takes issue with para 61 of the Bailiff's judgment which we have already set out.
78. In our judgment if clause 3.4 of the Heads of Terms is an agreement to agree or an agreement to negotiate as submitted by the Solicitor General then it follows that, subject to the Notice to Affirm, the respondents' claim is indeed hopeless and must be struck out and the suggestion that this might be a developing area of law cannot save it. To be fair though we do not consider that the Bailiff was in fact saying that this was a separate ground for refusing the application, merely an "additional" matter that had influenced him.
79. We are conscious of Mr Power's submission that clause 3.4 had to be interpreted at trial in the light of the evidence of witnesses and of documents (including those obtained on discovery). But in our view, in the light of the way the matter has been pleaded in the Amended Order of Justice, we cannot envisage that any evidence, whether oral or documentary, which might be given at trial in support of the pleaded case, could be capable of rendering clause 3.4 to be of legal effect. In any event, even were the area of law, referred to by the Bailiff in para 61 of the judgment, to be a developing one, in our view the instant case is not one where a trial and a factual investigation could impact on the conclusions the court might arrive at.
80. Finally we turn to the Notice to Affirm. It is in two parts. First, para 1 is to the effect that the Heads of Terms are not a mere agreement to agree or an agreement to negotiate. By contrast the Heads of Terms constitute a contract for the overall arrangements and core terms for the Development, which "delimits" any unilateral repudiation or negation of the core terms in the negotiations for the Development Agreement. Second, paras 1.1 to 1.4 are to the effect that if the Heads of Terms and specifically clause 3.4 is an agreement to negotiate only, then such an agreement is not void for uncertainty for the reasons therein stated.
81. In our opinion para 1 of the Notice to Affirm is not an additional ground. It is a repetition of the respondents' case which we have rejected. As to the second ground, even if this is an additional ground which we doubt, we have found that clause 3.4 is an agreement to agree or an agreement to negotiate and thus under Jersey law incapable of giving rise to a contractual obligation capable of enforcement. We agree with the contention in the second sentence of para 1.2 namely that the whole of the Heads of Terms must be considered in determining its true construction. When looking at the whole of the Heads of Terms we have concluded that clause 3.4 is a mere agreement to agree or an agreement to negotiate. Accordingly we consider that there is nothing in the second ground.
82. Accordingly, for the reasons set out above we allow the appeal of the Minister and strike out the claim against him.
Jersey Automatic Company Ltd v HA Gaudin and Co Ltd  JJ 159.
Walford v Miles  2 AC 128.
Sax v Tchernoy  795.
Abballe v Alstom UK Ltd  WL 331020.
Phillips Petroleum Co UK Ltd and Ors v Enron Europe Ltd  CLC 329 (CA).
Von Hatzfeld-Wildenburg v Alexander  1 Ch. 284.